RCBC allows $81m BB fund withdrawal despite stop order

The Rizal Commercial Banking Corporation of Philippines allowed the withdrawal of the bulk of the $81 million stolen from the Bangladesh Bank despite having received an order from its counterpart banks abroad to stop the payment, reports Philippines media.
This was revealed during the Senate investigation on the $81-million money laundering activity, reports the daily Inquirer.
During the hearing, Senator Teofisto Guingona revealed that after receiving the suspicious funds on February 5, the publicly listed bank controlled by the wealthy Yuchengco family received a ‘stop payment’ order from the Federal Bank of New York at 5:00pm of February 8 — a banking holiday in the country because of the Chinese New Year celebrations.
‘The stop payment order was received by your bank, Feb 8, 2016,’ he told RCBC president and CEO Lorenzo Tan. ‘On the morning of Feb 9, the first banking day, you should have seen the stop payment request. But apparently it was not honoured because the funds were withdrawn. All the funds were withdrawn.’
Guingona further pointed to documents filed by the Anti-Money Laundering Council with the courts noting that the RCBC ‘responded to the Bangladesh Bank’s stop payment request at 7:45pm of February 9.
‘That was the end of the day already,’ Guingona said. ‘Would you care to explain why the stop payment request — which should have been honoured at the very start of the banking day — was not honoured?’
To this query, the RCBC chief invoked the Bank Secrecy Law and declined to reveal specific details about the transaction, but offered an explanation of general procedures pointing to the responsibility of the branch manager to execute the stop payment order.
‘Sorry. I cannot confirm or deny this request specific to this transaction,’ Tan told Guingona. ‘But as a general rule, when there’s a freeze order on an account, the branch manager involved should comply with such an order.’
Pressed further if RCBC’s head office sent the stop payment order to Maia Santos-Deguito, the manager of its now controversial Jupiter St branch in Makati City, the bank president stonewalled and again pointed at Deguito’s responsibility.
‘Again, I’m precluded because of bank secrecy. But as
a general rule, these orders are sent by the head office to the branch manager,’ Tan said.
Just before posing the question to Tan, Guingona also asked the same question to Deguito in an attempt to ascertain how the funds slipped through the bank’s internal control mechanisms despite indications from its foreign counterparts that the fund transfer effected on February 5 was fraudulent.
‘February 9 was a banking day. That was a Tuesday. $81 million was still there in the accounts,’ said the senator, chair of the Senate Blue Ribbon committee. ‘On February 9, all the $81 million was withdrawn. Did you not have a stop payment request on February 9?’
At this, Deguito, too, invoked the Bank Secrecy Law, telling senators that she was willing to answer questions only in a closed-door executive session, because she has become the subject of a complaint filed by the Anti-Money Laundering Council against her, and that anything she would say in public could be held against her.
‘I apologise but questions related to my actions I can only answer in an executive session,’ Deguito replied.
Frustrated by both sides’ invocation of the Bank Secrecy Law, Guingona pointed at the inaction of the bank on the request by its New York counterpart to hold the transaction and allowing the funds to be withdrawn by still unknown parties.
‘All these amounts that you mentioned were withdrawn on February 9. And the stop payment request was already there on the morning of February 9,’ Guingona said. ‘And yet all these millions of dollars were withdrawn. Had the stop payment request been honoured, then $58 million of the $81 million would have been preserved and would not have gone astray.’
During Tuesday’s hearing, AMLC officials told senators that they received a request for assistance from Bangladesh Bank as early as February 11, after which two Bangladeshi officials flew to the Philippines on February16.
AMLC then conducted its own investigation on the issue.
The Inquirer broke the story about the laundering of funds through the local financial system on February 29, and on that day — 20 days after the bulk of the funds was withdrawn from fictitious accounts created at RCBC’s Jupiter branch — regulators asked the Court of Appeals to freeze seven bank accounts suspected to be involved in the laundering activity.
On the next day — 3 weeks after the funds were withdrawn from the bank, converted into pesos, with some being moved to local casinos — the Court of Appeals issued a freeze order. A report from Bangladesh quoted a government official as saying that only $68,000 had been frozen.
The Senate will resume its probe on the issue on Thursday with an eye on amending the Anti-Money Laundering Act to strengthen it against future laundering attempts.
In the Tuesday hearing, an official of a remittance company being dragged into the $81 million money laundering controversy admitted personally delivering some $18 million and another 600 million peso cash to a Chinese junket operator identified as WeiKang Xu, the Inquirer added.
Salud Bautista, president of Philrem Service Corporation, told the Senate blue ribbon committee that she delivered P600 million to Xu allegedly on orders of RCBC branch manager Deguito.
Osmena, chairman of the Senate committee on banks, raised about what he described as two ‘strange transactions’ between the remittance company and the junket operator.
‘You delivered P600 million in cash to a Mr WeiKang Xu of Solaire. Do you know a Mr WeiKang Xu?’ asked Osmena. ‘He’s the beneficiary of the remittance,’ Bautista replied.
The senator then asked the Philrem official who gave her instructions to deliver the money to Xu.
‘The branch manager,’ Bautista said.
Osmena then asked Deguito, who was also in the hearing, if she could confirm Bautista’s statement.
‘I will answer everything in the executive session,’ Deguito said.
However, when asked if knows the junket operator, the branch manager answered no.
‘You instructed somebody to deliver P600 million in cash to somebody you don’t know?’ Osmena said, and added in jest, ‘Can you deliver it to me next time…?’
Aside from the P600 million cash delivery, Osmena noted what he described as ‘more curious’ cash delivery of $18 million to Xu, which Bautista also confirmed.
Bautista said the $18 million funds were delivered in tranches—from February 5 to February 13, 2016. ‘Is it possible to get $18 million cash?’ asked Osmena.
‘Yes and it’s not in a period of one time,’ Bautista said.
‘You’re the one who delivered, Ms Bautista?’ asked Guingona.
‘In the beginning, yes,’ Bautista said, adding that in the end, it was their delivery men who delivered the rest of the funds.
Reuters reported that transfers of $81 million into RCBC were consolidated into one account and some of the money was converted to pesos.
CCTV cameras at the branch were not operating when the money was withdrawn but investigations have shown that it then went via a foreign exchange broker called Philrem Service Corp to the Chinese man and two casinos.
It was not immediately clear if the man was of mainland Chinese or Taiwanese nationality, Guingona said.
A spokesman for RCBC said he could not immediately comment on the CCTV cameras at the branch.
The senator said $29 million ended up in an account of Solaire, a casino resort owned and operated by Bloombery Resorts Corp. Bloombery is controlled by Enrique Razon, the Philippines’ fifth-richest man in 2015, according to Forbes.
‘We really don’t comment on issues that are currently under investigation,’ Solaire Corporate Communications Head Nana Soriano said.
Senator Guingona said a further $21 million went to an account of Eastern Hawaii Leisure Co, a gaming firm in northern Philippines. Reuters tried several phone numbers to seek comment from Eastern Hawaii officials but was unable to reach any.
State prosecutors said a complaint has been lodged by the Anti-Money Laundering Council against the manager of the RCBC branch and the holders of the dollar accounts in her bank into which the money was originally deposited.
An AMLC official told Reuters on Tuesday that more people were likely to be named.
The branch manager, Maia Santos-Deguito, has denied any wrongdoing and in an interview with the local ANC TV channel said she was being used as a scapegoat.
Guingona said that because casinos were not covered by the country’s anti-money laundering laws it was not clear if the stolen funds could be recovered.
‘The paper trail ends there. That is the problem,’ he said. ‘Right now we are at a dead end.’
ABS-CBN News of the Philippines reported that the Senate could not locate four individuals whose bank accounts received $81 million in stolen funds from the BB.
A Senate official said Michael Francisco Cruz, Jessie Christopher Lagrosas, Alfred Santos Vergara, Enrico Teodoro Vasquez had fake addresses and could not be located nor summoned to the Senate inquiry on Tuesday.
Senator Guingona III earlier said the four individuals opened US dollar bank accounts with the RCBC Jupiter branch using fake documents on May 2015.
Two of the four men, Guingona said, submitted fake driver’s licences for their account application. He added that all four indicated false addresses in their application forms.
The Inquirer reported that Businessman Kim Wong, who is among six traders under probe for money laundering, left the country even before the story on the infusion of $81 million of stolen money into the banking system broke.
Wong, according to sources at the Ninoy Aquino International Airport, left on March 4 on Philippine Airlines flight PR 300 to Hong Kong.
The Inquirer learned that Wong, whose full name is Kam Sin Wong, has been using multiple passports to enter the .

News Courtesy: www.newagebd.net